Prestige Hospitality Ventures, part of the property development company Prestige Group, plans to raise up to INR 27 billion ($318 million) in its upcoming IPO.
It has filed a draft red Herring prospectus (DRHP), which is a document that outlines the business plan of the Securities and Exchange Board of India Prestige announced that it was also looking at a possible pre-IPO placement up to INR 3.4 Billion ($40 Million).
India’s IPO market has been booming. Prestige’s filing comes almost 5 months after Brigade Hospitality filed an IPO. Brigade received approval from regulators back in February but has not yet been made public.
Schloss Bangalore is the luxury hospitality group that owns India’s The Leela Palaces. filed for a $599 million (INR 50 billion) IPO, the largest ever in India’s hotel industry. ITC separated its hotel business earlier this year. ITC Hotels.
Prestige’s draft Prospectus states that around INR 11 billion (129 million dollars) will be used to repay or prepay existing loans, reduce interest costs, and improve the balance sheet.
The remaining funds are used to support growth by acquiring stressed or strategically located hotels assets.
How Prestige Hospitality Makes Money?
Prestige Hospitality Ventures focuses on owning and developing high-end hotels and resorts in India. Rather than operate the hotels directly, the company’s strategy is “asset ownership.” Prestige Hospitality outsources day‐to‐day management to global operators under long‐term service agreements, typically 20 to 35 years in length, with renewal options.
In exchange for base and incentive fee and royalties, hotel operators such as Marriott International, Hilton, Banyan Tree, and Banyan Tree Banyan Tree, (Angsana), Hilton, Sheraton (St. Regis), Edition (W Hotels), Sheraton (Autograph Collection), Banyan Tree Banyan Tree, (Angsana), Hilton, (Conrad) and Banyan Tree Banyan Tree, (Angsana), handle revenue management, personnel, procurement, and routine maintenance in return
The Prestige model allows Prestige Group to maximize the value of assets and properties, while also leveraging the distribution, operational and brand expertise of the leading hospitality groups.
Revenues are generated primarily by room rentals, food, beverage, banqueting and other ancillary service. Convention centers at some properties (such as Sheraton Grand Bengaluru), provide significant event-driven revenues.
Where are the Hotels located?
Prestige’s asset portfolio consisted of 7 operating hotels with 1,445 key numbers as of December 31, 2024. One hotel is currently being rebranded and renovated, going from 178 to 191 keys.
It also has 12 properties in various stages of development: three “ongoing” assets with 951 expected keys, and nine “upcoming” assets with 1,558 expected keys, across Goa, Mumbai, Hyderabad, and Bengaluru.
Marriott will manage all 12 properties.
Prestige stated in its DRHP that it relies heavily on Marriott International to operate its hospitality assets.
Marriott International operates five of the seven hotels in its portfolio. Revenue from sales of hospitality services from Marriott International’s hospitality assets accounts for 69.12% of total revenue generated by Marriott International from its sale of services during the nine-month period ending December 31, 2024, and fiscal 2024.
Marriott International is to operate Marriott International’s nine upcoming hospitality properties and three existing hospitality assets.
These properties are located in key business and leisure markets, including prime business districts and airport corridors — Whitefield in Bengaluru, Aerocity in Delhi, and HITEC City in Hyderabad.
The DRHP noted that major urban centres, such as Mumbai and Delhi, Bengaluru and Chennai, Hyderabad, Goa and Hyderabad, account for about half of India’s hotel key supply, and for almost 60% of the air traffic.
The Financials So Far…
Prestige reported that its operating portfolio for fiscal 2024 had an average room rate of INR 14,223 (167 dollars) with a 59% occupancy, resulting in a RevPAR INR 8,440 (100 dollars).
While occupancy lagged peer averages, with Chalet Hotels and others achieving closer to 74%, Prestige’s ARR remains competitive, reflecting the largely upper‐upscale positioning of its assets.
Prestige reported total income of INR 10.2 billion ($120 million) for the year ended March 31, 2024, a 2.4% decrease from the prior year due to the renovation‐related downtime; by comparison, the broader market saw double‐digit growth as hotels reopened fully post‐pandemic.
